Correlation Between Air Transport and Vestis
Can any of the company-specific risk be diversified away by investing in both Air Transport and Vestis at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Air Transport and Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Vestis, you can compare the effects of market volatilities on Air Transport and Vestis and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Air Transport with a short position of Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Vestis.
Diversification Opportunities for Air Transport and Vestis
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Vestis is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis and Air Transport is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Air Transport Services are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Air Transport i.e., Air Transport and Vestis go up and down completely randomly.
Pair Corralation between Air Transport and Vestis
Given the investment horizon of 90 days Air Transport is expected to generate 1.86 times less return on investment than Vestis. But when comparing it to its historical volatility, Air Transport Services is 1.16 times less risky than Vestis. It trades about 0.01 of its potential returns per unit of risk. Vestis is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,908 in Vestis on August 31, 2024 and sell it today you would lose (290.00) from holding Vestis or give up 15.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.26% |
| Values | Daily Returns |
Air Transport Services vs. Vestis
Performance |
| Timeline |
| Air Transport Services |
| Vestis |
Air Transport and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Vestis
The main advantage of trading using opposite Air Transport and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Vestis can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vestis will offset losses from the drop in Vestis' long position.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| Vestis vs. CF Industries Holdings | Vestis vs. Barings BDC | Vestis vs. Eastman Chemical | Vestis vs. Ecovyst |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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